What is California Competes?
The California Competes Tax Credit is an income tax credit for businesses growing in California. The purpose is to attract and retain employers in California industries with high economic multipliers and that provide their employees good wages and benefits. Any business can apply.
The credit is awarded through a two-phase process competitive process, with about 3 rounds planned every fiscal year. The next application round starts on January 2nd through January 23rd, 2017, and there is about $100mil worth of tax credits that will be available in this round. Note- any business can apply, and 25% of the available credits are reserved for small businesses (less than $2mil in annual revenues).
California Competes Tax Credit
- Credit against the income tax due the Franchise Tax Board
- 6 tax year carryover
- Credit can offset Alternative Minimum Tax
- Tied to achieving contractual (hiring/ investment) milestones over 5 years
- Caps on spending- the total value of the credits allocated through the program are capped each fiscal year [$243mil in fiscal 2016-2017].
- No more than 20% of the total amount may be granted to a single taxpayer business.
- Specified value and time frame- the dollar value of the credit and timeframe in which the credit may be taken are specified in the agreement with each company awarded the incentive, mitigating the forecasting challenge associated with accumulating tax credits without knowing when companies may choose to use their credits.
- Competitive application process that awards minimizing the credit request relative to the project size- companies submit an online application for a two-phase review. The process starts with a quantitative analysis in which the credit amount requested is divided by the sum of aggregate investment and aggregate employee compensation over 5 years. The applicants with the lowest ratios advance to Phase 2.
Register for one (one-hour) Webinar each Wednesday, at 10:30am, from now until January 18th, 2017 at
To apply online: https://www.calcompetes.ca.gov
More info: http://www.business.ca.gov/Programs/CaliforniaCompetesTaxCredit
Questions: 916-322-4051 or [email protected]
LAEDC is a sponsor and partner with this workshop series.